Dear PoPville – Can my condo board charge me higher fees if i rent out my condo?

Photo by PoPville flickr user Néstor Sánchez Cordero

Dear PoPville,

I find myself in the unenviable position of having to rent out my condo because it’s under water and I can’t afford to sell it. My condo board is attempting to charge me 125% of my regular condo fees because I’m renting it out (in addition to a $250 move-in fee and a $200 annual leasing fee). It seems to me that this “special assessment” is discriminatory as it is singling me out to pay additional fees for common elements.

I can at least follow the theoretical logic of the move-in and leasing fees, as they are related to some theoretical expense that I am causing the association, but I can see no expense related to simply adding $120 a month to my condo fees because I’m renting my place out. Further, 25% of my condo fees is not 25% of a smaller unit’s condo fees so they are not applying the absolute fee uniformly. I think the policy is discriminatory – asking me to pay more than my fair share of the common building costs. I’d love to hear what PoPville thinks of this.

Anyone else renting a condo unit face a similar situation?

61 Comment

  • Everything you need to know should be written in the condo board’s rules/regulations, which I can only hope you read thoroughly when buying the place. If it’s not written there, you don’t have to do it, plain and simple.

    • Yep. Rental surcharges are very common… most associations want to discourage investment properties so that the condo can be a community of owners. Everything about the rental surcharges should be laid out in your bylaws. I have never heard of any owner being able to rent their condo without SOME kind of surcharge.

      Also, your dues are calculated based on the unit plat. The formula is uniform. A larger unit has a larger fee than a smaller unit. So yes, your surcharge would be higher than the surcharge placed on a small unit that has a smaller fee. This is not discriminatory.

      Sorry 🙁

    • ^^ Yup, what s/he said. The condo agreement is a contract. They can’t make up stuff, and the condo owner can’t just write his own rules. What’s in the papers is what matters.

      I wish OP the best, but it’s not as if one can’t think of principled reasons why the association would do this. Here’s mine: renters are less invested in the building than owners, so it’s reasonable to assume that they might overuse/undercare-for common spaces or resources and the landlord should pay more to hedge against that risk and/or dissuade leasing to non-owners.

      • God, I am so sick of the “renters are less invested in the building than owners…” I’m a long-term renter, and whether I live in a rented condo or an honest-to-goodness apartment, I have always endeavored to keep both my unit and common elements in good shape.

        If anyone can show me irrefutable evidence that having renters in the building lowers property values, I’ll cede my point, but until then I’ll always think that folks that sit on condo boards with an anti-renter bias are shooting themselves in the foot–if they want renters to care about the building, how about not making them feel like second-class citizens? I’m not saying we should get voting power or anything, but at least don’t treat us like pests who are hurting their bottom line.

        • I’m a renter in a condo building as well, and there’s currently a debate about changing the bylaws because our building is approaching the “magical” line of being less than 50% owner-occupied. Apparently this is going to make it harder for the owners to sell their units if they want to, because many lenders won’t finance a purchase in a condo building that’s less than 50% owner-occupied, so it’s harder for potential buyers to get financing. Not saying this makes sense as a policy, but it definitely has the potential to hurt property values. So there you go. It’s nothing personal.

        • high rental buildings often go for less than high ownership buildings. there’s plenty of logic to back up why this is and just because you are a good tenant doesnt indicate that there are lots of people like you.

          The most easily “provable” way property values are harmed is that interest rates are anywhere from 1/4th to 1% higher on condo purchases with high rental rates. Its not because banks are “idiotic” or “greedy” its because there is a higher risk. despite this, just the fact that interest rates are higher is going to depress the sales price of the property…

        • This “irrefutable evidence” that you’re seeking is simple economics. The FHA, VA and other loan and loan insurance underwriters won’t issue loans or policies when a building is occupied by more than a certain percentage of renters (typically 30-50%). When fewer people can qualify for a mortgage to buy your place, you have less competition. Less competition means lower prices relative to similar units.

          Or are you looking to bait someone into saying that renters trash buildings? You’re not getting that argument from me, but I can assure you that rental properties have higher utility (for those that are master-metered) and maintenance costs relative to condominiums. You can do your own research, but I know this for a fact.

          • We couldn’t get a loan for our elevator project because of our renter ratio, so we had to get a line of credit as a considerably higher interest rate.

            This is a big problem.

            Sure, EVERYONE who posts here is an amazing renter, but when you live in a condo building and have a high turnover rate of renters every summer, have renters who probably should be living closer to campus, etc, it’s very hard on owners that live there. When I purchased, I was given a false owner/renter ratio and had no idea how bad it was. Then I went through a summer transition – clogged elevators, summer parties, drunk friends passed out in common areas and more. It’s not to say that ALL renters are this way, but when your building’s front door is propped open by renters moving in after hours, you tend to think a little differently about the situation.

        • It’s not about you, it’s about the banks/lenders/crimelords. It’s always about the money-men.

        • Long-term renters are often great and responsible people who are an asset to the buildings they live in.

          Unfortunately, short-term and/or party-oriented renters can make life unpleasant for other residents, be they owners or fellow renters. And when lenders look at the owner/investor ratio, they don’t care which kind of renters are occupying the units. So (as someone else was pointing out) it’s not personal.

        • you are an exception…..

        • Sorry, but you’re a huge exception. When it comes to noise, trash, damage, and waste, it’s almost always the renters. Wish it weren’t so — there’s no evidence that Americans taking the mortgage interest deduction do anything more for their community (except gardening) than renters, but in the condo buildings I’ve witness, I’m afraid that’s why the covanents are written as they are. Good for your building, for enforcing them.

    • Not sure what the OP is looking for from this post beyond a sympathetic ear – which he or she is not finding.
      At the end of the day, and as stated above, everything that needs to be said about whether the condo board can do this is contained in the Condo Bylaws/Rules/Regulations.
      The OP is being discriminated against – he or she is being treated differently than an owner who chooses not to rent. But this discrimination is probably legal. The OP should consider his or herself lucky. Some condos have caps on the number of units that can be rented at any particular time – which is completely legal. If he lived in one of those condos and there were too many other units being rented, he or she would be SOL. My old co-op charged a rental surcharge and limited the ability to rent to one year. After that the owner had to either lose the tenant or sell the apartment. All part of communal living by contract.

    • clevelanddave

      As a long term renter who was a board member as a renter, and as somone who is now an owner who is now on a condo board, I feel your pain as a good long term tennant.

      However, being responsible as a board member means dealing with worst “normal” cases. The fact is that many if not most renters only stay for a year or two then leave, particularly in this transient city; that when they do move in and move out they often do damage; that during their tennancy they have no long term comittment to the building, and many renters and owners will try and pack ’em in to get every dollar they can out of the place- especially when they are in difficult financial straits.

      This results in not one but two groups that don’t care as much about the building as most owner occupieds do: a probably short term tennant that has no investment in the building financially, and an owner who is not invested in the building as a living space.

      Too many short term renters and too many absentee landlords and you end up with a building that deteriorates because no one really cares too much about and no one really considers home.

  • Agree with house in the rear…

    Check your condo docs, rules and regs and bylaws. If it ain’t there, you don’t pay.

    However, lots of condo associations have been updating their bylaws and regs the past ~5 years to thwart against condo buildings becoming virtual apt complexes. Renters cause more wear and tear and high renter ratios make condo buildings less attractive to the buyers market and harder to finance for potential buyers.

  • For goodness sake, can we please stop throwing out the term “discrimination” around. Your status as a condo-owner who wants to rent his place out is not a protected basis.

    And yes that penalty seems high, but it is not “discriminatory”. Obviously the condo board wants to dissuade renters which is not unheard of or hard to understand. Renters don’t have a vested interest in respecting others around them like owners do.

    • This is an excellent point, and I think this post is a great place to make it.

      There is nothing “discriminatory” going on, and I’ve yet to read a Supreme Court case that would suggest non-owner-occupied-condominium-owners are a protected class in this society that would suggest there was some special level of scrutiny even if this were discriminatory.

      • It is absolutely discriminatory, just not unlawfully so.

        • Fair enough.

          My objection is to the use of the rhetorical device to place the user of the term in the victim’s role as he describes his own predicament. It just comes across as whiny … yes, they are being treated differently, but not in a way that is illegal/immoral/inappropriate/etc.. And it happens in a lot more than just this post.

  • As a condo board member (not your building) I can tell you that anybody renting in a condo building drops the property value for everyone there. If more than 50% of a building is rented many banks won’t offer you a traditional loan to buy in that building (which means ALL owners would not be able to sell). FHA and VA etc all have their own rules about how many units can be rented if they provide loans on the building. This fact aside renters could generally give a flip about a building or what is good for all. Renters usually are just flopping until they find the next best thing. Owners who live in their unit tend to care more about the building and the people living there. You add all of this up and it behooves a condo board to create needed rules like this to protect everybody as a whole from those who want to make a quick profit being a landlord. It’s always the same story, those who want to own and live want the best for the building and those who want to own and rent want was is best for them.

    • Oh, : ) my point being boards will create these rules to dissuade you from renting since renting brings down property values. If you are going to degrade the quality of life of the owners who do live there and the property value of the building as a whole then you should have a very good reason, and by paying the higher rates you tend to consider what is best now. It is called accountability. If you want to screw the building pay the rates, if you want to do what is best for the building put it on the market and get it sold to an owner who will live there. I condo building is not me, me, me it is always we,we,we. People who don’t like that lifestyle buy a home, then they just have to fight with their neighbors.

      • To the Anonymous Condo Board member. I see your point, but it appears to me that the OP is in a serious financial bind, and is doing their best under the circumstances. Perhaps you’d rather they go into foreclosure or sell well below prior market values, either of which could also have negative impacts on the condo values and quality of life of the other condo owners.

        • +1. I imagine a foreclosure would hurt the values of the other units in the building more than a rented-out unit.

          • Hello Dave and A

            This is the National Capital Region, you will never have a problem finding somebody to make an offer on your place or renting it. If you have to rent it, you have to go by the rules you agreed to when you made the purchase, foolishly few people bother to read what they sign. Put it on the market and sell it or shut up and pay the extra fees, simple as that. I don’t wish this person any harm but every person has to accept their own responsibility, you love it when that is good and you hate it when it is bad. It’s called being an adult. the OP should be glad that she has the option to sell BECAUSE of this exact rule laid out by the board. Wouldn’t she be in a mess if she could not sell because nobody could get a loan to purchase the property due to the rentals in the building. Ye paz ya money and ye takz ye chances, this is life. God Bless.

          • Anonymous – I did not say anything in my reply to your post that the OP should not comply with the requirements of their condo docs. If they are in compliance with the condo docs, they have every right to rent. I took objection to your attitude toward someone trying to work themselves out of a financial bind (through renting, rather than perhaps, foreclosure) as well as your condemnation of their existing rights to rent, even if its done so legally. If they rent legally and it adversely impacts your property value, that’s the risk you took in buying a condo. As you said, “Ye paz ya money and ye takz ye chances, this is life.”

      • Yup. That’s what I did. Heard enough bad -crazy condo board stories and bought a fee simple home. I wanted the option to rent out my place without having to beg or pay someone for permission (besides DCRA).

        OP sorry about the fees but you’re going to have to eat the costs somewhere, either when you rent or when you sell (or if the price doesn’t budge after several years of renting, both). Try to short sell it and move on with your life.

    • While I understand why the condo boards have the rules they do, I disagree witht he premise, I don’t think renters are less invested in where they live especially in the higher end units. Not so much since the bubble burst, but before that plenty of buyers bought places with the intention of moving in a one or two years and were not invested in the building anymore then renters.

      I also think buildings can do a lot more to involve renters, I know in my building the owners have the same sort of dismissive attitude towards renters displayed in this thread. I know when i was a renter, i wanted to make sure where I lived stayed nice.

      • I don’t think you know what the word “invested” means.

      • Yes.

        I get your financial argument — owners have more skin in the game, to use the en vogue cliche.

        However, (and yes, I am a renter) many renters DO care about maintaining nice buildings and neighborhoods, and owners very often will let property fall into disrepair or otherwise be disrespectful of their community.

        So let’s stop with what are essentially classist stereotypes.

        • I don’t think these arguments are necessarily classist. They just reflect an economic reality that doesn’t have any bearing on whether someone rents by choice or out of necessity, which (to me) would be some proxy for class.

          As a landlord, if I choose to let my property fall into disrepair, the consequences to me are basically unbounded: I ultimately will have to pay the full cost of later repair/replacement, risk losing tenants and rent, and/or selling the property at a concomitant loss. In other words, I either take care of the property or pay full-freight down the road, which is what sets my incentive structure. If, on the other hand, my tenants abuse the place, realistically they’re only on the hook for the amount of their security deposit, because the transaction cost of pursuing more damages in the courts (attorneys fees, etc.) plus the litigation risk I’d incur (i.e., the real risk that I may not win the case) essentially mean that the damages would have to be fairly high before I as the landlord would not just eat the loss — much greater than the amount of the deposit, anyway. That’s a different incentive structure for the renter, and it has nothing to do with class.

        • Whether or not is classist has nothing to do with the fact that it is true. There are lots of data out there to support the notion that neighborhoods and properties are kept in better condition when there is a higher percentage of property owners, relative to renters in the area.

  • if its not in the bylaws you don’t have to do it. I understand most condos wanting to limit rentals but the way to do that is through setting a max # of units allowed to be rented at any given time. I think FHA won’t make loans in buildings where more than 25% of units are rented. Also, condos usually will stipulate how many years you can rent regardless of the cap. All of its dictated by laws not just random whims of board members.

  • If it really is that much of an issue and you can’t sell, then maybe you should walk away the mortgage and turn the condo in to the bank. Because you have the option to walk away kind of negates your “discrimination” claim.

  • Pretty much what everyone else said, except that I disagree with anon preferring a hard cap as a method of retaining owner-occupiers. While it’s probable that OP’s condo also has a hard cap so the condo units can be financed by FHA-insured loans, the extra disincentive could help weed out investors from buying in the first place and at the same time allow those would-be owner/occupiers who truly need to rent out their unit to do so.

    Regardless, there’s no illegal discrimination here. If it’s in the condo docs, it’s totally legal — and fair, in my opinion.

  • I agree with everyone who is saying that the reason for the additional fee makes sense given the issues involved with selling condos/getting financing, but can we drop the condescension about renters? Not all renters are renting because they don’t care about their living space. Some of us care a great deal and are renting because DC is ridiculously expensive to buy in and we’d rather live in our first choice neighborhood than buy in our fourth choice neighborhood. That doesn’t make us bad neighbors or mean that we’re going to trash our living space.

  • What everyone else said… the only thing I’ll add is that if it is in the by-laws and causing you financial strain then you could always submit a proposal to the Board asking that the fees/percentage rates be changed. Or better yet, run for an officer position on the Board the next time there are elections. I sure hope the fees they’re charging you are outlined in the by-laws otherwise you’ve got a corrupt Board to deal with – good luck!

    • Great idea. Get yourself elected to the board to further your own financial interests. I’m sure s/he will be really popular with her neighbors when s/he pushes through a reduction in HOA fees and the garbage stops getting picked up.

      • My comment is geared towards the idea of collaboration and negotiating in the best interest of both the OP as a vested owner experiencing financial strain and for the building’s best interest as a whole. Based on the OP’s submission it definitely sounds like a discussion needs to be had regardless.

        I think there’s something to be said for working in collaboration to find a compromise as opposed to neighbors hating each other and the OP not being able to pay what they are actually requiring s/he pay.

        It’s important that people remember that they have a voice in a condo building, hence the nature of the living environment. I would think that any proposal someone in OP’s situation would make would not be for a reduction for the entire HOA, only for those specific fees.

        But you’re probably right, the whole building will devolve into complete anarchy with trash everywhere… 😉

  • I was under the impression from a former co-worker that was President of his condo board as well as my attempts to have this (a “rental fee”) implemented in my high-renter building that it was against DC law to have a renter fee, hence the move-in/move-out fees and “lease filing” fees.
    Consider contacting the tenats rights people. I know that if this were legal, the guy I used to work with would have done it…..

    And if you rent our your property, you need a business license. FYI.

    • It is definitely legal to impose fees upon owners who are renting their units in DC. These fees are something determined by the condo building and the condo building only. Perhaps you’re thinking of the viewpoint of the tenant whereas OP is speaking as an owner? But maybe I misunderstand your comment. Good luck, OP!

      • Per the condo law of 1986, it’s legal!
        The Unit Association has the:
        (10) Power to impose on and receive from individual unit owners any payment, fee, or charge for the use, rental, or operation of the common elements or for any service provided to unit owners;

        I suppose I was given incorrect info by my former coworker! So the UOA can definitely do it, and know that I know that, I’ll be bringing it to my next meeting.

        • “Common elements” are hallways, stairways etc. Not an individual unit. Read your bylaws. It is all there. The board may have passed a rule imposing extra fees for renters – it may or may not be legal – read your bylaws.

          Actually changing the bylaws of a condominium is an enormous task – requiring not only agreement by unit owners but by the mortgage holders of each unit. So be doubtful and demand careful documentation of any alleged changes to bylaws.

          All that said – TALK to the people on your board and you’re likely to work it out!

          • Nonsense.

            Amending bylaws typically requires a supermajority of shares but certainly not the assent of every lien holder. Some also require that amendments to the bylaws be voted on at the Annual Meeting and not just a special meeting.

          • I don’t feel like typing in all 4 paragraphs here – but here’s the main – “Accordingly, all first mortgagees shall be given 30 days notice of all proposed amendment, and no amendment or modification of these bylaws impairing or affecting the rights, priorities, remedies or interests of a first mortgagee shall be adopted without the prior written consent of such mortgagee.”

            So yes, maybe nonsense, but still a fact.

    • I’ve never heard of this being illegal, but then again it’s been a while since I had to deal with legal issues arising from a condo. A quick check of the statute, however, reveals this:

      To the extent that the condominium instruments expressly so provide, any other common expenses benefiting less than all of the condominium units, or caused by the conduct of less than all those entitled to occupy the same or by their licensees or invitees, shall be specially assessed against the condominium unit or units involved, in accordance with such reasonable provisions as the condominium instruments may make for such cases.

      We can argue about reasonableness, but I don’t see how this is categorically illegal.

    • . . . and take yourself off the Homestead Deduction with the District’s tax office. If you don’t, let’s hope your neighbors help you to be more honest.

  • Agree with everybody else. Sorry you’re in this situation, but is 25% extra of your monthly condo fees really that much? I find the condo fees in DC to be generally insane, so maybe it is.

    Look on the bright side. With DC’s rental market going through the roof, you can probably pass through the additional cost to a renter and call it a day. At least I hope you can.

  • Why not just raise the rent by $120…problem solved. Seems like you can ask pretty much any price for an apartment in this city and have someone gladly pay it.

  • FWIW, my building (which is a co-op, not a condo) does the same thing – 25% surcharge on the monthly operating fee if you rent.

    As pointed out by nearly everyone else here, the logic is that keeping the property “owner-occupied” is in everyone’s interest except for investor-owners.

    And, I’ll add that given the crazy amount of near-fraud-like flipping that happened in DC in 2006 – 2008, I have to say that anything that scares away investor-owners before they buy is probably a good thing.

    Too bad you’re getting screwed by this, but it’s not discrimination.

    • For co-ops the increased fee makes even more sense, since not having the unit owner-occupied affects whether or not the building can recieve the homestead deduction for property tax purposes.

  • as most people have commented, if it’s in the condo docs, then the condo board can do it. this is why you should read your condo docs! either don’t rent it out or charge $120/mo more for rent.

  • Darling, just add the $120 to the rent.

  • Discriminatory? Absolutely. The policy appears set up to discriminate against those owners who wish to rent out their property, and is a way to discourage that.

    Legal? Probably, depends on your condo contract, which you apparently agreed to without reading. Not all discrimination is bad or illegal.

    • Agreed. My point exactly. Don’t throw around a word like discrimination when what you really mean is you think you got a raw deal or are being treated unfairly. There’s nothing illegal about someone discriminating against someone else for any reason whatsoever, unless the basis for the discrimination is a protected basis set out by law.

  • It’s possible that at the time the OP purchased the condo, the bylaws said one thing, and have since been updated with the new fee structure. If that’s the case, the OP should be grandfathered in under the old bylaws.

  • As a former board member, I can tell you dealing with owners who want to rent is a time-consuming, vexing, aggravating proposition. I know there is a stereo type of busybody board members (and I accept they exist) but my concern was putting the welfare of the building above individual owners. You as an owner have a self-interest that says you should be able to rent. That might be good for you, but hurt everyone else (it is a fact that FHA, Fannie, Freddie, etc, have standards about the % of rentals in a building when it comes to financing).

    We maintained a cap and also charged higher fees. It was all documented in our rules that everyone agreed to. If you the restrictions are not in your rules, you have a case. If they are, then you are guilty of not reading the contract you signed when you bought your place.

    I will say that our rules gave the Board discretion to go over the cap if it deemed the case necessary. Not sure if your rules give the Board the same power but when we re-did our rules we were aware that (hopefully temporarily) going over the cap was better than foreclosure or dealing with someone who stopped paying their fees.

    Good luck.

  • What I’m curious about is, given how difficult it can be to rent out your condo, who is the market for some of the studio/small 1BR condos I see in DC? I know I would grow out of a 450 sq ft place in 2-3 years tops and that makes it just not worth it to buy.

  • I think you are right, prayer always helps as you seem to be a law abiding citizen.

Comments are closed.